# K/L Sign Flip Probe

Investigation of why the demographic coefficient on delta-log(K/L) flips sign across subsamples.

## 1. K/L Regressions by Sample

Dependent variable: delta-log(K/L). Controls: fiscal_bal_gdp, nfa_gdp_lag, log_rel_opw, kaopen.

| Specification | N | Countries | R2 | Z_1 | Z_2 | Z_3 |
|---|---|---|---|---|---|---|
| Full sample | 4146 | 163 | 0.022 | -0.041 (0.453) | 0.010 (0.237) | -0.000 (0.139) |
| OECD only | 992 | 37 | 0.180 | 0.250*** (0.007) | -0.026** (0.036) | 0.001 (0.111) |
| Non-OECD only | 3154 | 126 | 0.009 | -0.037 (0.571) | 0.008 (0.436) | -0.000 (0.366) |

## 2. Income Terciles

| Specification | N | Countries | R2 | Z_1 | Z_2 | Z_3 |
|---|---|---|---|---|---|---|
| Low income (bottom tercile) | 1307 | 68 | 0.027 | -0.246 (0.139) | 0.048* (0.074) | -0.002** (0.048) |
| Middle income | 1341 | 82 | 0.044 | -0.106 (0.203) | 0.020 (0.108) | -0.001* (0.072) |
| High income (top tercile) | 1424 | 68 | 0.038 | -0.120* (0.059) | 0.021** (0.023) | -0.001** (0.012) |

## 3. Rule of Law Interaction

| Specification | N | Countries | R2 | Z_1 | Z_2 | Z_3 | Z1_x_rol | rule_of_law |
|---|---|---|---|---|---|---|---|---|
| Full sample (RoL) | 3261 | 163 | 0.032 | -0.093* (0.084) | 0.016** (0.045) | -0.001** (0.029) | -0.003*** (0.007) | -0.004 (0.116) |
| OECD (RoL) | 769 | 37 | 0.208 | 0.243** (0.012) | -0.027** (0.043) | 0.001 (0.104) | -0.005*** (0.004) | 0.005* (0.066) |
| Non-OECD (RoL) | 2492 | 126 | 0.016 | -0.088 (0.181) | 0.015 (0.142) | -0.001 (0.125) | -0.004** (0.025) | -0.007* (0.078) |

## 4. FDI -> K/L

| Specification | N | Countries | R2 | fdi_liab_gdp | Z_1 | Z_2 | Z_3 |
|---|---|---|---|---|---|---|---|
| Full: FDI only | 4146 | 163 | 0.000 | -0.000 (0.902) | -- | -- | -- |
| Full: FDI + Z | 4146 | 163 | 0.022 | -0.000 (0.698) | -0.041 (0.445) | 0.010 (0.231) | -0.000 (0.134) |
| OECD: FDI + Z | 992 | 37 | 0.179 | 0.000 (0.440) | 0.261*** (0.005) | -0.028** (0.029) | 0.001* (0.091) |
| Non-OECD: FDI + Z | 3154 | 126 | 0.010 | -0.000 (0.522) | -0.038 (0.564) | 0.008 (0.429) | -0.000 (0.362) |

## 5. Comparison: Z -> I/Y (gross_fixed_investment_gdp)

Same specifications but on investment/GDP instead of delta-log(K/L).

| Specification | N | Countries | R2 | Z_1 | Z_2 | Z_3 |
|---|---|---|---|---|---|---|
| Full sample (I/Y) | 3552 | 146 | 0.068 | 38.512*** (0.006) | -4.417** (0.034) | 0.141* (0.097) |
| OECD (I/Y) | 1014 | 37 | 0.176 | 56.838** (0.023) | -5.554 (0.104) | 0.146 (0.261) |
| Non-OECD (I/Y) | 2538 | 109 | 0.065 | 42.108** (0.017) | -4.915* (0.070) | 0.158 (0.162) |
| Low income (I/Y) | 1071 | 58 | 0.119 | 62.161* (0.075) | -7.680 (0.176) | 0.261 (0.289) |
| Middle income (I/Y) | 1111 | 74 | 0.036 | 44.871 (0.102) | -5.044 (0.222) | 0.155 (0.362) |
| High income (I/Y) | 1318 | 64 | -0.003 | 41.951** (0.014) | -5.079** (0.040) | 0.173* (0.078) |

## 6. Interpretation

Key findings from the sign-flip probe are summarized below.

*(Auto-generated -- review regression output above for full details.)*
